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Card charge-offs, late payment rate fell in August

NEW YORK (AP) -- As consumers get better at paying their credit card bills on time, banks are writing off less debt as uncollectible.

Moody's Investors Service said Monday that the rate of U.S. credit card charge-offs fell to 4.19 percent in August from 4.56 percent in July. The charge-off rate is a measure of credit card balances written off as uncollectible as an annualized percentage of card balances.

Moody's index of credit card delinquencies, or those balances with a monthly payment more than 30 days past due, also improved. The rate declined to 2.32 percent in August from 2.36 percent the previous month.

August's card delinquency rate is at a record low, which points to lower charge-offs in coming months, Moody's said.

In the wake of the recession and the modest recovery, credit cards have been left in the hands of more affluent consumers who are better able to pay their bills in full each month. Shoppers with lower credit scores are now less likely to use credit.

As delinquencies drop, Moody's data shows card users are increasing the size of their payments. The average amount of principal that cardholders paid as a percentage of their balance hit a new high in August, rising to a rate of 22.71 percent from 22.47 percent a month earlier, the firm said.